Demystifying Peppol: Your guide to secure, streamlined business transactions 

Blog | May 21, 2024

12 minute read
Man looking at computer with Peppol logo

Business efficiency stands at the forefront of any company's operations. As technology advances, businesses must embrace new solutions to stay competitive and effective. A global network like Peppol plays a vital role in the gradual implementation of e-invoicing worldwide. This network facilitates secure exchanging of electronic documents, mostly e-invoices, between organizations and businesses.

Before Peppol was introduced, e-invoicing was fragmented, inefficient, and costly for businesses due to the lack of standardization and interoperability. Electronic invoicing systems varied significantly based on country and involved organizations. Often proprietary, each organization had its own system for generating and processing electronic invoices, leading to compatibility issues among trading partners. While some countries had established standards for e-invoicing domestically, cross-border e-invoicing was complex, often requiring manual steps or reliance on third-party services to convert invoices into compatible formats.

This comprehensive guide explores Peppol, underscoring its revolutionary role in facilitating electronic document exchange between trading partners. It offers an in-depth understanding of Peppol, including its fundamental components and operational mechanics. Additionally, the guide outlines both the advantages and potential obstacles of adopting Peppol for your business needs.

What is Peppol?

Peppol might sound like a strange name, but it stands for something powerful: Pan-European Public Procurement Online. Peppol is an international network and standardized framework that connects organizations of all sizes, eliminating the hassles of incompatible formats and manual processing, when exchanging electronic documents, such as e-invoices, purchase orders, catalogs, and other messages.

At the heart of Peppol is a network infrastructure known as the four-corner model. This model enables organizations to connect once to the network and then exchange documents with any other connected party, regardless of their individual back-office systems or technical capabilities. This interoperability framework plays a crucial role in promoting cross-border trade and enhancing accessibility for organizations of all scales.

Peppol defines a set of specifications and standards for electronic document formats, data elements, and messaging protocols. These standards, such as the data format Peppol BIS, ensure interoperability between different organizations and systems, allowing them to seamlessly send and receive business documents through the Peppol network using their selected Peppol Access Point.

To access the Peppol network for document exchange, organizations must link up and register with a Peppol Access Point. Various options exist for this connection, including through a service provider, invoice portal, or bookkeeping service.

To dispel any confusion, let's clarify what Peppol is not. Peppol is not a portal or a provider of exchange services. At the time of writing, it does not follow a CTC model as there is no information exchange with tax authorities.

The growing global importance of Peppol

While Peppol originated in Europe, it swiftly gained traction worldwide. Many countries outside of Europe have also implemented Peppol to facilitate electronic procurement and to document exchanges among businesses.

Notably, Singapore was among the early adopters outside Europe to realize its advantages. Subsequently, countries like Australia, New Zealand, Japan, and Malaysia also embraced Peppol. Currently more than 40 countries have adopted the Peppol model, including more than 32 European countries.

Map of countries where Peppol is implemented or will be soon
Countries implementing Peppol

How does Peppol work?

By following a structured pathway, Peppol simplifies and secures electronic document exchanges across borders and systems. Central here is the Peppol network.

What is the Peppol network?

The Peppol network is a secure and standardized network infrastructure that allows to exchange electronic documents such as invoices, purchase orders, and catalogs between Access Points. Communication works through a 4-corner model which will be explained further on.

Key components of the Peppol network

What is a Peppol service provider? Who owns Peppol? What are Peppol Access Points? In this section you’ll get an answer to these questions and the most commonly used Peppol components:

  • Peppol Access Points (APs): These Access Points serve as gateways that facilitate the connection between organizations and the Peppol network. They ensure that messages, especially e-invoices, are correctly formatted, comply with standards, and securely transmitted through the Peppol network.
  • Peppol Service Providers: These are the organizations that provide services to participants such as suppliers and buyers, and act as intermediaries between these participants and the Peppol network. Services from Peppol Service Providers include onboarding onto the network or providing technical solutions such as translating a document into a correct format.
  • Peppol Service Metadata Publisher (SMP): A directory that contains information about Peppol participants, their services, Access Points, and how to connect to them.
  • Peppol Service Metadata Locator (SML): A central address book for participant IDs or SMP details.
  • Participants: These are the organizations, or suppliers and buyers, who participate in the network. Similar to the old 'yellow pages', all members of Peppol can be looked up in the Peppol Directory. This makes it easy for Peppol end users to find each other in the network and identify each other's capabilities. Also, their Peppol IDs - a unique identifier or address that is assigned to each participant - can be found here.
  • OpenPeppol: This non-profit international association collaborates with various stakeholders, including governments, businesses, and service providers, to develop and maintain the Peppol specifications and promote their adoption across Europe and beyond.
  • Peppol Authority: Peppol Authorities are responsible for governing and overseeing the Peppol network, ensuring standardization and secure electronic transactions among businesses and governments across Europe and globally. They manage access points, certify Peppol service providers, and maintain interoperability specifications to facilitate seamless data exchange.

E-invoicing interoperability and compliance report

Download now

Billtrust e-Invoicing Compliance Report

Peppol standard and formats

Interoperability is one of the main objectives of Peppol, which necessitates the implementation of standards and document formats.

What is the Peppol standard for invoices that is in use today? More specifically, we have two standards:

  • Peppol BIS Billing: Since 2019, all Peppol messages must conform to the Peppol BIS 3.0 standard (BIS stands for Business Interoperability Specification). Peppol BIS provides a set of specifications that enable communication of information through the Peppol network. This standard is based on UBL (Universal Business Language), an XML-based format.
  • Peppol PINT: From July 2023, another standard, Peppol PINT (Peppol International Invoice), became available for use in the Peppol Network. While Peppol delivered cross-border interoperability within Europe, the introduction of the PINT methodology is a significant moment in achieving true global interoperability, beginning with e-invoicing. Next, the regional versions of PINT for Australia-New Zealand, Singapore, and Japan will undergo finalization and approval for production use. Notably, the Japan Peppol Authority has already released three PINT-based invoice specifications. The Peppol Authorities in Singapore, Australia, and New Zealand are anticipated to launch optional PINT-based specifications in the upcoming months.

The Peppol Four-Corner model explained

The underlying network structure behind Peppol is also known as the Four-Corner model. This decentralized model involves 4 'corners' and works as follows:

The Peppol Four-Corner Model

  • Corner 1: The supplier (or sender) - sends the electronic document to their Service Provider or Access Point.
  • Corner 2: The supplier's Access Point or Service Provider - connects to the buyer's Service Provider or Access Point and sends the electronic document to it.
  • Corner 3: The buyer's Access Point or Service Provider - sends the electronic document to the buyer's ERP or another internal system.
  • Corner 4: The buyer (or recipient)

Getting started with Peppol: the workflow

Venturing into the world of Peppol and its mechanism can seem overwhelming at first, yet understanding its workflow is crucial for businesses aiming to streamline their electronic document exchanges. This section is dedicated to demystifying the workflow process within the Peppol network, and this for the 4-corner model.

  1. Registration and identification
    Organizations interested in using Peppol must first register with a Peppol Access Point before they can start sharing invoices over the Peppol network. Upon registration, the organization is assigned a unique Peppol ID, which functions as its address within the Peppol network. Registration is mandatory for both trading parties, supplier and buyer.
  2. Document preparation (Corner 1)
    The supplier prepares the document (in most cases an e-invoice) in a standardized format compatible with Peppol specifications. This ensures uniformity and compliance across different systems and jurisdictions. This document originates from the supplier's own ERP software or business system.

    During this phase, Service Providers rigorously verify the structure and content of documents, ensuring they meet the Peppol BIS (Business Interoperability Specifications) and other standards.
  3. Document sending (Corner 2)
    Service Providers then send the document through the supplier's Peppol Access Point. This access point acts as the gateway to the Peppol network, ensuring secure and compliant document exchange. Additionally, Service Providers have the capability or option to serve as a Peppol Access Point themselves.
  4. Validation and routing
    At the point of the supplier's Peppol Access Point (Corner 2), the document is validated against Peppol's specifications to ensure it meets all required standards and protocols, such as those related to electronic signatures and data integrity.

    The supplier's Peppol Access Point (Corner 2) obtains the buyer's digital address details via the SML and SMPs, and then routes the standardized document through the Peppol network to the buyer’s Access Point (Corner 3). Routing may involve intermediary nodes or Service Providers that facilitate message transmission between supplier and buyer Access Points.
  5. Document receiving (Corner 3)
    The buyer's Peppol Access Point receives the document and forwards it to the intended buyer. Simultaneously, it sends acknowledgment messages to the supplier's Peppol Access Point, confirming the document has been successfully received.
  6. Document processing (Corner 4)
    The buyer processes the received document through its own systems, which may include validation, approval, payment processing and archiving steps.
  7. Integration and automation
    Many organizations integrate their internal systems (ERP, accounting software, etc.) with their Peppol Access Point to automate the exchange and processing of documents. This integration allows for automatic data capture, reduced manual errors, and streamlined operations.

On the horizon: Peppol Five-Corner model

The Five-Corner model, still in development, introduces a central tax or fiscal platform as the fifth corner, enhancing the existing infrastructure. Peppol Service Providers or Access Points can report data, including VAT charges, to the tax authorities or other government agencies in real-time. The Five-Corner model is also called Peppol CTC, where CTC stands for Continuous Transactions Controls. One of the first countries that will soon adopt this model is the UAE.

The Peppol Five-Corner Model

This is how a five-corner model works for Peppol CTC:

Above we explained how the four-corner model works. The five-corner model differs in some aspects.

  • When the Service Provider sends the transformed e-invoice through the supplier's Peppol Access Point (Corner 2) and over the Peppol network to the buyer’s Access Point (Corner 3), at the same time this e-invoice is also being sent over the Peppol network to the tax authority (Corner 5), for clearance.
  • The buyer’s Service Provider, through the Access Point (Corner 3) receives the cleared invoice from the tax authority (Corner 5) and sends it to the buyer (Corner 4). Again, over the same Peppol network.

Benefits of a five-corner model include:

  • Stronger legal compliance for all involved parties
  • Service providers assist in a more seamless exchange of information
  • Automation of real-time reporting and the procure-to-pay process

The benefits of Peppol

The benefits of using the Peppol network are numerous and considerably impactful for businesses and organizations engaged in electronic document exchanges worldwide. With its standardized and secure infrastructure, Peppol streamlines the entire process of trading document exchanges, offering unparalleled advantages. The story of Peppol and its benefits shares similarities with the overall advantages of e-invoicing. Explore more on the benefits of e-invoicing.

Key benefits include:

  • Efficiency and automation: Peppol automates the processing of documents such as e-invoices which leads to faster transactions and accelerated payments. This automation significantly reduces manual data entry and associated errors, enhancing operational efficiency.
  • Cost savings: By eliminating paper-based processes and reducing the need for manual intervention, businesses experience notable cost savings. This includes lower transaction costs and minimized operational expenses.
  • Standardization: Peppol uses standardized formats and protocols, which simplifies the exchange of electronic documents and reduces errors.
  • Security and trust: Security is paramount in electronic transactions, and Peppol excels in this aspect. The network's stringent verification process for all trading partners through Peppol Authorities and Peppol IDs ensures that each participant is reliable. This significantly reduces the risk of fraud or fake invoices, enhancing trust among users.
  • Compliance: Compliance with local and international tax regulations is simplified through Peppol. The standardized format ensures that documents meet the legal requirements of various jurisdictions, reducing the complexity of cross-border transactions.
  • Increased accessibility and interoperability: Peppol’s unique 4-corner model facilitates seamless interaction between different organizations’ systems, making it easier for enterprises, big and small, to engage in international trade. This inclusivity fosters a more dynamic and competitive business environment.

In essence, Peppol not only makes electronic document exchange more efficient and secure but also supports compliance and reduces operational costs. By enabling easier access to international markets, Peppol contributes to the global economy's overall growth and efficiency.

Who uses Peppol?

Peppol is used by a wide range of organizations across Europe and beyond, including:

  • Government agencies: Many government agencies across Europe have adopted Peppol for electronic procurement processes. This includes entities responsible for public procurement, tax authorities, and other government bodies.
  • Suppliers: Businesses that supply goods and services to government agencies or other organizations that use Peppol often utilize the framework to send electronic invoices, receive purchase orders, and exchange other procurement-related documents.
  • Buyers: Organizations that procure goods and services, including government agencies, large corporations, and other institutions, use Peppol to receive electronic invoices, send purchase orders, and exchange other procurement-related documents with their suppliers.
  • Service providers: There are also service providers that offer Peppol-compliant solutions to facilitate electronic invoicing and other procurement processes for businesses and government agencies. These service providers may offer software platforms, integration services, and other tools to enable organizations to connect to the Peppol network.

How can I join the Peppol Network?

Joining the Peppol Network offers organizations a robust platform for document exchange. The process to connect is designed to be straightforward, enabling businesses of all sizes to easily adopt and implement Peppol’s standards. But challenges remain.

Challenges with Peppol e-invoicing

While e-invoicing with Peppol facilitates quicker and smoother connections between trading partners, it still requires significant effort for both sides. Here's what's involved:

  • Suppliers looking to send invoices need to map their ERP export format with Peppol's standard message exchange format (UBL).
  • All essential information needed to map to the UBL invoice must be available in the supplier's ERP system.
  • There are also country-specific requirements to consider.
  • Prior to accepting incoming invoices, the buyer's ERP format must be synchronized with Peppol's exchange format.

Streamlining your business with Peppol: Billtrust as your trusted partner

Struggling to navigate the complexities of Peppol and e-invoicing? You're not alone. Although all Peppol Service Providers enable connections to Peppol, the scope of services they offer can differ significantly. Some provide merely basic connectivity, while others deliver a comprehensive suite of services.

Billtrust is a certified Peppol Service Provider and Access Point in the Netherlands and Poland, and at the time of writing, Billtrust is actively offering services across nine countries, among them France and Germany, where e-invoicing is based on the Peppol network.

Sending e-invoices over Peppol with Billtrust is straightforward:

  1. Supplier sends UBL 2.2 file: You send your invoice file to Billtrust through a secure connection (SFTP or API).
  2. Billtrust transforms the file: We convert your file to the Peppol BIS 3 format for network compatibility.
  3. Validation and Delivery: Billtrust validates your invoice and sends it securely over the Peppol network to the buyer's Service Provider or Access Point.
  4. Buyer receives the invoice: The buyer seamlessly receives your e-invoice through their chosen provider.
  5. Status updates: You'll receive clear status updates and any error messages regarding your invoices.

Billtrust extends far beyond mere Peppol connectivity. Navigating the vast landscape of invoicing networks, Accounts Payable systems, and governmental platforms is a daunting task for suppliers, often requiring significant time, complexity, and financial resources.

Thankfully, Billtrust has forged these essential connections, streamlining access for customers through the Billtrust Connectivity Service. This is further enhanced by services like seamless ERP integration, compliance monitoring, document archiving, sophisticated analytics, and comprehensive management of the order-to-cash cycle, encapsulating the full scope of solutions Billtrust offers.

Talk with one of our experts

to learn more about the complexities of e-invoicing and mandates, and start your path toward a modern invoicing process.